Any currency war could put India in a tough spot

Wed Jan 30, 2013 1:48pm IST

Photos of yuan (top) and U.S. dollar banknotes are displayed at a money exchange in Hong Kong September 13, 2010. REUTERS/Bobby Yip/Files

Photos of yuan (top) and U.S. dollar banknotes are displayed at a money exchange in Hong Kong September 13, 2010.

Credit: Reuters/Bobby Yip/Files

Related Topics

Reuters Market Eye - Finance Minister P. Chidambaram says premature to say Japan's move to weaken yen constitutes a currency war, but urged Asian countries who are looking to stem volatile inflows to avoid depreciations of their currencies.

Chidambaram's comments must be seen in the context that India needs large inflows and a stronger rupee to narrow the current account deficit and to curb inflation.

Despite QE3-led strong inflows into domestic stocks, the rupee actually saw mild depreciation in 2012, with the central bank intervening to prop up the currency.

A currency war could put India in a tough spot, not following other countries in depreciating its currency could make its exports less competitive.

But the country also can't afford a weaker currency at a time when confidence in the rupee is not particularly strong because of the twin deficits.

(Reporting by Subhadip Sircar)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Reliance Q4 sales rise, refining margin narrows.  Read 

Innovative Solution

Innovative Solution

Turning smog into jewels - a Dutch designer's solution to Beijing's pollution.  Video 

Insider Trading

Insider Trading

Rajaratnam's brother loses bid to dismiss insider trading charges.  Full Article 

Literary Giant Dies

Literary Giant Dies

Mourning and memories in Gabriel Garcia Marquez's languid hometown.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage